Skip to content

Whether you’re new to the Federal Student Loan program or a continuing borrower, July is the ideal time to figure out if and/or how much you need to borrow for the upcoming academic year.  Why July you ask?  If you’re a continuing student that has borrowed before, you want to create good habits and get your Financial Aid in place early. For any first-time borrowers, there’s typically a 30-day delay for the loan dollars to reach the college from the Dept. of Education.  Therefore, if classes begin in August, you want to allow enough time for the loan money to reach the college so it’s available for the start of the fall semester.Cartoon character walking up stairs dragging a weight.

How do I determine if I need to take out a loan?

Start by writing down your college’s Cost of Attendance (COA).  The COA should be clearly listed on your student portal or on your award letter sent from the college.  If you can’t find it, you can either contact the college’s Financial Aid Department or use this handy tool on the EducationQuest website to figure it out.  Subtract any grants and scholarships awarded from the COA. If those types of aid won’t cover your direct costs (tuition/fees, books/supplies, and room/board), then you may need to tap into your NEST529 account, pay out-of-pocket, or borrow student loans.

Will there be any additional costs to cover?

 Indirect costs (personal/transportation) are also figured into the COA. This is an estimated amount of money a student might spend over the course of an academic school year.  Example expenses include fuel for your vehicle, dining off-campus, toiletries, etc. You’ll need to decide if it’s necessary to borrow money to cover personal/transportation expenses, or if you and your parents will pay for them as they come along. 

If you determine that federal loans are necessary, there are some things you’ll need to know.

20/21 Stafford Loan Interest Rates

Anyone borrowing Subsidized and/or Unsubsidized Stafford Loans for 20/21 will be excited to know that there has been a decrease in the annual, fixed interest rate.  Beginning July 1st, 2020, the interest rate on all undergraduate Stafford loans is set at 2.75%. This means that any loan dollars that you borrow for 2020-21, will remain at 2.75% for the life of those loans.  Refer to our loan chart for additional information, as well as Graduate Stafford, Grad PLUS and Parent PLUS loan rates and terms.

*NOTE: For students who have existing federal student loans, the government has frozen the accrual of interest due to the Covid-19 pandemic.  Click here for more information.

What’s the difference between Subsidized and Unsubsidized Loans?

Direct Subsidized Loans are interest-free while the student is enrolled at least part-time in college. Direct Unsubsidized Loans accrue interest while you are in school.

Is there a cap on the amount I can borrow per year? 

Yes!  A freshman can borrow a maximum of $5,500, sophomores up to $6,500, and juniors/seniors up to $7,500 per academic year.  There is also a limit on the amount a student may borrow over a lifetime.  Refer to our loan chart for those numbers.

What if my Financial Aid package still won’t cover my direct costs?  

If you find that all aid offered to you is still not enough to cover your cost of attendance, then you might consider getting a part-time job to help offset that unmet need.  Other options include a payment plan that is arranged with the college, or parents might look into borrowing a Parent PLUS loan.

How do I apply for federal loans?

By completing the FAFSA each year you plan to be in college, you will be considered for federal student loans for the upcoming academic year.

Action needed to complete the loan process:

For returning borrowers, you’ll need to accept the loans you’re being offered on your financial aid award letter, or specify a lesser amount if you don’t need the full loan offered.

For first time borrowers; you’ll need to go to and complete two tasks. First, fill out a Master Promissory Note for undergraduate students. This is your agreement to repay the loan. Second, you’ll complete Entrance Loan Counseling to make sure you understand your rights and responsibilities of borrowing.

Student loans may not be the most desirable type of financial aid, but it’s certainly not the end of the world if you have to borrow. Think of it as an investment for your future!  Be conscientious about the amount of money you borrow each year and only take out what you need to cover educational expenses.  At any time, you can log onto to view your loan balances, interest accrued, lender information, and much more.